O'Brien muddies the waters as INM agrees third standstill over unpaid bond

Monday 27 July 2009 03.46 EDT
First published on Monday 27 July 2009 03.46 EDT

Independent News & Media may have secured a third extension to the repayment of a €200m bond, but it isn't out of the woods yet. Its troublesome shareholder, Denis O'Brien, immediately vowed to block a sale that could provide it with essential funds and also raised the spectre of examinership.

It was revealed on Friday that INM had agreed a further standstill with bondholders until 27 August in order to facilitate more "constructive discussions".

This came the day after INM confirmed that it had sold off its 18% stake in Cashcade, the owner of gaming brands, for €15.3m (£13.2m) as part of its de-leveraging strategy.

The result of these "good news" announcements? Its share fell further, to 20 cents, representing an 85% drop in value over the past 12 months.

At its current price, the group's market capitalisation is €172m. No wonder investors are nervous, given that it has a €1.4bn debt pile.

O'Brien gave creditors little to celebrate yesterday in an interview in the Irish edition of the Sunday Times (not yet online). He said he would block any attempt to sell INM Outdoor, the company's advertising division in South Africa.

"I'm against it," he said, adding that South Africa had a "hell of a good media market. The earnings in the outdoor business are growing at 20 percent a year. It's a great business. It doubles in four years."

According to unconfirmed market speculation last week, an offer of €100m has been made for INM Outdoor.

O'Brien also raised the possibility of INM going into examinership, the Irish version of US-style Chapter 11 bankruptcy protection. "We'll have to consider it," he said.

O'Brien, who is the group's second-largest shareholder with a 26% stake, conceded that the costs of examinership would be prohibitive for the Irish company, saying: "I think that for the scale of the business, it just can't afford it."

O'Brien has long been at loggerheads with INM, demanding that it sell off its loss-making British national titles, The Independent and the Independent on Sunday.

There has been an uneasy truce since March between him and the company's largest shareholder (and creator), Tony O'Reilly, and his son, the new chief executive, Gavin.